Commentary

Winnipeg wins as NHL’s southern strategy fails

Commentary: Hockey teams looking to Canada as sport’s home beckons

By

BillMann

Reuters

PORT TOWNSEND, Wash. (MarketWatch) — The National Hockey League’s southern-growth strategy, the Toronto Globe and Mail says accurately, is in shambles, and “Canadian cities and investors are left to pick up the pieces.”

Not a problem. American cities may not be clamoring for NHL franchises — and some more will lose them soon — but it’s a different story up north, in the sport’s ancestral home.

We’ll take even more NHL teams, Canadians and investors are saying, as the NHL is expected to announce this week that the struggling NHL franchise in Atlanta, the Thrashers, will move to Winnipeg. That thriving Manitoba city is one of the primary victims of the ultimately failed strategy in the 90’s that tried to boost interest in hockey — and TV ratings — in the U.S. southern latitudes, where the game is still mostly a Canadian (legal) alien.

We’ll take — and invest in — NHL franchises that can’t make money in the U.S., Canadian businesses are now saying and demonstrating.

This week, Atlanta. Next year, quite possibly the Phoenix Coyotes, the struggling desert ice-hockey team that was ripped away from Winnipeg in 1996, back when the now-robust Canadian dollar (loonie) was worth about 60 percent what it is today.

One of the partners in the new Winnipeg deal is Toronto billionaire/media titan David Thomson, one of the 20 wealthiest people in the world, whose family holding company, Woodbridge Ltd., owns the Globe and Mail and also controls giant news service Thomson-Reuters
TRI, -0.35%

Atlanta fans threw a modest, sad going-away party for the team in the parking lot, marking the second time the Georgia city has lost an NHL franchise. This came days after the Phoenix suburb of Glendale agreed to fork over another $25 million to keep the money-losing Coyotes there for one more season. Moving the Coyotes back to Winnipeg has been the NHL’s stated plan lately (and CBC-TV took the bait and has been reporting that the Coyotes were going to move back to Winnipeg.)

But many NHL insiders figured Phoenix would likely hold on for another year, and that Thomson and his Winnipeg-based partner, True North, were always the NHL’s real Plan A. The Coyotes could end up in another Canadian city — possibly Quebec, which also had its NHL team ripped asunder in 1995 and relocated to Denver — next year.

Quebec City is planning to build a new multimillion-dollar arena for an NHL club, even though Canadian Prime Minister Stephen Harper has said Ottawa won’t pay for it. But the French-speaking province has native son and Quebecor media mogul Pierre Peladeau and his millions of loonies behind its NHL-return plan, the Vancouver Sun recently reported.

Canadian media are now suggesting that another incongruously located NHL team, in the football mecca of Columbus, Ohio, could also be moved north, back to the game’s roots in Canada, where its fan base is strongest. NHL hockey in Columbus, Ohio? Just the sound of that makes many Canadians shudder. And I’m still getting used to hockey in Nashville, of all places. (Not exactly a city with a rich hockey history).

A recent study strongly suggested that southern Ontario, Canada’s population base and home of the flush, playoff-averse Toronto Maple Leafs, could support at least one — and possibly more — additional NHL teams. It could happen, given Canada’s new economic clout and the weaker U.S. southern franchises.

In Winnipeg late last week, just after The Globe and Mail broke the story that the NHL would return to that frozen prairie city (the NHL was still publicly denying it this past weekend), huge street parties broke out, with old Winnipeg Jets jerseys and flags reappearing amid all the honking and cheering.

The Thrashers are owned by the Atlanta Spirit, the same outfit that owns Atlanta’s NBA team.

NHL commissioner Gary Bettman, an American lawyer and the major force behind the league’s southern strategy, is not a popular man in Canada. Nonetheless, he’s expected to make the announcement in Winnipeg Tuesday of the sale and transfer of the Thrashers to Thomson’s majority partner, True North Sports and Entertainment, which owns and operates the Manitoba Moose of the American Hockey League and the MTS Centre arena, which would become the NHL team’s new home. (A good guess for its new name: The Jets).

While most Americans may not care much about hockey, the Globe and Mail put the impact of the Jets leaving Winnipeg in 1996 thusly:

“For a Canadian city, a Prairie city, to lose its National Hockey League franchise is a blow that only a Canadian could understand. It is as if the city’s raison d’être were yanked out from under it. It was a blindside hit...a massive, collective concussion. Was there life after hockey? No.”

Now, there is, thanks largely to changed business conditions in Canada. Besides the stronger loonie, Winnipeg has a new arena, a stronger economy, an NHL salary-cap system that allows smaller-market teams to be competitive (high salaries and a lower loonie are the reason Winnipeg and Quebec lost their teams), plus strong prospective ownership that includes Thomson.

The corporate base needed to purchase Winnipeg luxury boxes — always a big factor in sports-franchise economics — is strong, with 30 of Canada’s largest 800 corporations based in Winnipeg, more than in NHL cities Edmonton and Ottawa. The purchase is being done with private money, the province of Manitoba isn’t chipping in one single loonie.

The NHL’s Canada future

Damien Cox, sports columnist at Canada’s largest daily, the Toronto Star, suggests Canada has entered a “golden era” of hockey following its gold-medal hockey win at the Vancouver Olympics.

“It seems very possible,” he writes, “that Canada could in the next few years regain its former complement of eight NHL franchises, or perhaps more.” (There are currently six Canadian NHL teams).

“The NHL, which not so long ago seemed disinterested in Canada, suddenly needs the birthplace of the game more than ever.”

“The stars do seem to be aligning,” Cox says, adding, “There appears to be no shortage of struggling, money-losing U.S. teams interested in moving north, and no new Americans cities are clamoring for teams.”

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information.
All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only.
Intraday data delayed at least 15 minutes or per exchange requirements.